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collusion is absolutely consistent with free markets. Companies make deals ALL the time. Getting lower rates for supplies, fencing off markets, agreeing to not

collusion is absolutely consistent with free markets. Companies make deals ALL the time. Getting lower rates for supplies, fencing off markets, agreeing to not litigate, etc. Looking at it another way...these companies are trying to keep their costs down (labor being #1). This in turn allows them to charge lower prices for their products while maintaining a profit margin that keeps investors happy. They are serving their consumers. We should be thanking them for being prudent and not engaging in labor bidding wars that would push their costs skyward. This is capitalism 101.

rayiner 13y ago
Companies make deals, but making deals across an industry to fix prices inputs undermines the market. If everyone that used bananas colluded to set artificially low prices, that might result in cheaper banana products, but would result in a deadweight loss. I.e. the loss sustained by the banana producers would outweigh the savings to the consumer.
- holograham 13y ago
  This wasnt across an industry...this was between two companies...apple and google. Even still your analogy is still wrong...you are talking about banana consumers (which inherently will always go for the cheapest banana products that satisfy their needs) vs. a business who is trying to keep their costs down to remain competitive. There is an saying that everything in business should be viewed from the eyes of the consumer. If the consumer is getting the same product for cheaper and the business model is still viable (aka the business can sustain that price) then it's a net win. Again in your example, banana producers will lower their prices until they cannot be viable and thus they will stop supplying bananas. You cannot collude enough to keep failing business models in business.
  - rayiner 13y ago
    > you are talking about banana consumers (which inherently will always go for the cheapest banana products that satisfy their needs) vs. a business who is trying to keep their costs down to remain competitive. I'm talking about companies that buy bananas, not consumers. The supply chain looks like Farmers -> Dole/Chiquita -> You. If Dole and Chiquita colluded to keep the cost of bananas from farmers low, that is collusion that creates economic inefficiency. > There is an saying that everything in business should be viewed from the eyes of the consumer. If the consumer is getting the same product for cheaper and the business model is still viable (aka the business can sustain that price) then it's a net win. This "saying" is blathering that has no basis in economics.

rayiner 13y ago

Companies make deals, but making deals across an industry to fix prices inputs undermines the market. If everyone that used bananas colluded to set artificially low prices, that might result in cheaper banana products, but would result in a deadweight loss. I.e. the loss sustained by the banana producers would outweigh the savings to the consumer.

holograham 13y ago
This wasnt across an industry...this was between two companies...apple and google. Even still your analogy is still wrong...you are talking about banana consumers (which inherently will always go for the cheapest banana products that satisfy their needs) vs. a business who is trying to keep their costs down to remain competitive. There is an saying that everything in business should be viewed from the eyes of the consumer. If the consumer is getting the same product for cheaper and the business model is still viable (aka the business can sustain that price) then it's a net win. Again in your example, banana producers will lower their prices until they cannot be viable and thus they will stop supplying bananas. You cannot collude enough to keep failing business models in business.
- rayiner 13y ago
  > you are talking about banana consumers (which inherently will always go for the cheapest banana products that satisfy their needs) vs. a business who is trying to keep their costs down to remain competitive. I'm talking about companies that buy bananas, not consumers. The supply chain looks like Farmers -> Dole/Chiquita -> You. If Dole and Chiquita colluded to keep the cost of bananas from farmers low, that is collusion that creates economic inefficiency. > There is an saying that everything in business should be viewed from the eyes of the consumer. If the consumer is getting the same product for cheaper and the business model is still viable (aka the business can sustain that price) then it's a net win. This "saying" is blathering that has no basis in economics.